Money Machine

THE CONSERVATION OF VALUE

The idea is there, locked inside.All you have to do is remove the excess stone.

—MICHELANGELO

Mergers, stock splits, stock dividends, cash dividends, share repurchases, stock sales. Many potentially confusing corporate actions seem difficult to assess. Which are good for shareholders? Which are bad? Which are meaningless?

Once again, John Burr Williams helps clarify our reasoning, this time with his Law of the Conservation of Investment Value: The value of a firm depends on the cash it generates, regardless of how that cash is packaged or labeled. Nothing is gained or lost by combining two income streams or by splitting ...